Bitcoin, a cryptocurrency, is trendy among investors interested in investing in digital assets, as it is designed to be a form of money or payment that is not under the control of any person, entity, or group. Based on reports generated by CoinDesk Research, a trusted news site specializing in bitcoin and digital currencies, the BTC rose to $109,343 on July 9, marking a 0.8% gain over the last 24 hours, amid renewed discussions around the Fed Rate and potential changes to the federal funds rate.
On July 09 at 10:00 AM ET, Donald Trump, the current president of the United States, posted on Truth Social that the U.S. federal funds rate is at least 3 points too high, referring to a 3% reduction. He further stated in the post that the delay in rate cuts is costing $360 billion in annual burden in refinancing costs. Within 30 minutes after this post, the BTC began rising constantly as investors reacted to the possible short-term effects of such a dramatic policy shift, such as increased liquidity and a return to risk-taking.
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Daily Interest Burden: $3.3 Billion: Analysts Unpack Trump’s Fed Rate Claim
In a detailed thread post on X, macro analysts from The Kobeissi Letter explained Donald Trump’s Fed rate cut comment. Based on their analysis, they explained that the United States has already paid $1.2 trillion in interest payments over the last year, which is around $3.3 billion per day.
They further explained that Trump’s calculations are based on the full $360 billion US debt; however, only $29 trillion is actually affected by rate changes. Under more realistic estimates, they said that a full 300 bps cut applied slowly could lower interest expense by approximately $174 billion in the first year, and up to $2.5 trillion over the next five years if 20% of the debt is refinanced each year.
Experts Warn: Trump’s Proposed Cut Would Be Historic
Financial experts and analysts warned that even if the savings could be big, cutting rates by 3% would be a major risky move. In recent modern history, no single Fed rate cut has raised 100 basis points, even during the 2008 financial crisis or the period of the COVID-19 pandemic emergency in March 2020. They further said that applying a 3% large cut now, even though the economy is still growing at 3.8% annually, would be something that has never been done in history before.
The Kobeissi Letter warned that such a move would probably escalate inflation over 5%, causing a sharp decline in the US dollar. The experts said the drop might have the potential to exceed 10%, resulting in rising housing prices as a result of a sudden decline in mortgage rates. They further explained that the asset markets have the possibility to go up in the short term. The gold could reach $5,000, oil could surpass $80 per barrel, and the S&P 500 could go above 7,000. However, they also warned that without major cuts in the United States’ government spending, this could create many serious problems in the long run.
For Bitcoin, the suggestions are clear: a sudden decline in interest rates would be seen as a boost to the economy. This could result in more capital inflows into hard assets and alternative financial assets, like Bitcoin and other digital assets. While financial analysts and experts are still debating the possibility of such cuts, the market’s quick reaction showed investors are preparing themselves to secure possible gains.
BTC Technical Outlook: Key Highlights
- The BTC price suddenly rises within 30 minutes of Trump’s post on Truth Social regarding the Fed rate cut.
- Consolidation remained earlier on July 09, but after Trump’s comments on the US interest rate, the buying volume surprisingly increased.
- The price tested resistance around $109,761 while staying above $108,500, showing an upward trend.
- Bollinger Bands, a technical analysis tool that shows a price range of a security, had tightened to their closest levels in the cycle, often indicating the arrival of a big price move.
- Institutional collection showed strong trading activity near the support zones around $108,500 to $108,600.
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